May 31, 2019
2019 End of Session Review
Minnesota was recently recognized as the third best state in the country by U.S. News & World Report. The Best States rankings evaluate all 50 states across a range of criteria, including education, health care, infrastructure, and the economy. Minnesota was able to achieve this impressive ranking because of its dedication to making strong investments in schools, families, and infrastructure.
In a divided government, making these critical investments isn’t an easy road to travel. This was experienced first-hand in the difficult budget negotiations, lack of transparency in conference committees, and a tenuous global agreement made just one day before adjournment. The agreement triggered a flurry of conference committee reports being finalized behind closed doors that blew past the Legislature’s adjournment at midnight on May 20 and resulted in a special session that began on May 24 to pass the budget and tax bills.
Budget
The budget will spend $48.3 billion over the next two years, up from the current biennium’s $45.5 billion budget. There will be no general tax increase, but there will be a cut in the income tax rate that applies to middle-income earners as well as an enhanced working family tax credit.
Using the budget reserve
Senate DFLers fought for a balanced budget with fiscal stability to protect Minnesota’s economy. With federal uncertainty and slowing economic growth, legislators must be careful to balance any new spending with new revenue to protect the state’s economy and quality of life from future instability while not forcing the state into an irresponsible budget deficit.
There is deep concern among the Senate DFL that this budget uses $500 million of the state’s rainy-day fund to prop up spending in the next biennium, leaving only $491 million on the bottom line for 2022. A robust budget reserve is a critical part of adequately preparing for the next economic downturn, and after years of sound fiscal policy to build up the reserve, the state’s budget reserve is just shy of Minnesota Management and Budget’s recommendation. This shift could jeopardize Minnesota’s long-term fiscal health and the state’s AAA bond rating.
Education compromise not enough
DFLers in the House and Senate fought alongside Gov. Walz to increase funding for education while Senate Republicans came to the table with cuts. While the final compromise is fine for maintaining the status quo, Senate Republicans blocked the progress we need to fully fund our public schools, bring Minnesota’s ratio of counselors to students in line with national standards, and serve the needs of thousands of students. Every student, regardless of their race or zip code, deserves a good teacher and access to the materials they need to compete in today’s economy.
Provider tax continues
The provider tax will continue at 1.8% without a sunset, which helps pay for health care programs for 1.2 million Minnesotans.
Opioids
DFLers were pleased that the opioid bill will become law, funded through fees paid by drug makers and distributors, the bill raises nearly $21 million a year to fight opioid addiction in Minnesota by investing in new and proven strategies for treatment and prevention. It also delivers funding to counties to help with their increasing costs for child welfare services due to substance abuse.
DFL disappointments
It is deeply disappointing that there isn’t a plan to make life-saving insulin available on a temporary basis for those who cannot afford it. The proposal would have imposed a fee on insulin makers to fund a program in which diabetics could obtain insulin in an emergency. The legislation passed unanimously during the regular session, but the proposal was not in the final omnibus bill. DFLers offered an amendment to include it in the health and human services bill, but Senate Republicans voted the amendment down. No Minnesotans should lose their lives because they cannot afford the insulin they need to survive. The Senate DFL will continue to advocate for this lifesaving provision.
Another disappointment was that legislative leaders could not find agreement to make an honest, long-term investment in a safe and modern transportation system. Regrettably, this continues Minnesota down the path of potholes, unsafe roads and bridges, and underfunded transit options. The state needs long-term, dedicated funding to fix roads and bridges and improve the D+ rating the state received from the American Society of Civil Engineers. The Minnesota Constitution requires 100% of the gas tax be spent on roads, highways, and bridges; it is disappointing state lawmakers couldn’t come together and agree to fix Minnesota’s roads and bridges or expand and improve transit options in a sustainable way.
DFL legislators pledge to keep working to pass gun violence prevention legislation – supported by more than 80% of Minnesotans; to continue to advocate for legislation to restore the vote to those who have served their time and are integrated back into Minnesota’s communities; and to provide a path for all people to obtain a driver’s license to make Minnesota highways safer, which would result in insurance savings for all drivers and help businesses connect with workers. DFLers will also continue the fight to ban conversion therapy in Minnesota; the practice is discredited by mental health groups and medical boards as ineffective and damaging and should be against the law. It was also disappointing a bonding bill was not passed to provide transportation improvements, help the state maintain buildings and other assets it already owns, and spur job growth around the state.
Compromise is difficult
Neither side got everything they wanted. DFLers successfully fought off cuts to programs and critical services that help ensure Minnesota’s communities are thriving. Combatting Senate Republicans’ drastic under-funding of most priorities when the budgets were first released, the final agreement makes acceptable investments in public safety, higher education, and more – all things that contribute to a high quality of life in Minnesota.
DFL wins
There is $43 million for rural broadband and $125 million for public safety in the final budgets, including money to add more prison guards to improve the safety of the state’s workers. The tax bill restores state aid to local governments to 2002 levels, prior to the Pawlenty-administration cuts.
Senate DFL is committed to keeping the state great
The Minnesota Senate DFL remains committed to working together to build the state all Minnesotans deserve, with high-quality education, affordable and accessible health care, and increased support for working families. The values Minnesotans share brings communities together, serving as a guide for how legislators can make the state work better for all and keeping the state as one of the best in the country.
Minnesota agriculture has been hit by low commodity prices, tariffs, and extreme weather. These elements have pushed many farmers to the brink financially and emotionally. In response, the Legislature and Governor Walz focused on expanding mental health resources, protecting the agriculture industry from illness and invasive plants, and providing help for dairy farmers.
Capital investment bond change and corrections bill: Several legislative members and some conversation groups opposed the bonding bill last year as a result of it including bonds backed by the environment and natural resources trust fund instead of GO bonds.
The commerce omnibus budget bill came out of committee with little investment in the department. The Senate Republican bill had a $0 target and included additional funding only for health care enforcement within the Department of Commerce.
A major focal point for DFL legislators this session was protecting workers from wage theft, expanding access to paid leave, and giving all Minnesotans an opportunity to flourish in the state’s economy. In many ways, the omnibus budget bill took steps in the right direction but did fall short in several important areas.
The E-12 education omnibus budget billprovides an additional $543 mill in new funding for Minnesota school districts over the next two years. It provides a 2% increase each year in the basic funding formula, restores $49 mill in PreK investments, funds 4,000 young learners across the state, caps the special education cross subsidy to help school budgets, and makes permanent funding increases for BIE schools.
Two-year funding is provided for the Commerce Department’s Division of Energy Resources, Public Utilities Commission, Petroleum Tank Release Compensation Board, and Telecommunications, including agency operating adjustments.
Two-year funding is provided for the Minnesota Pollution Control Agency (MPCA), Department of Natural Resources (DNR), Metropolitan Council Regional Parks, Minnesota Conservation Corps, Board of Water and Soil Resources (BWSR), Minnesota Zoo, Science Museum, and Minnesota Board of Tourism.
A significant win this session was the repeal of the sunset of the 2% provider tax, which is set at a new, ongoing level of 1.8%. The additional revenue from the tax opened opportunities in the budget to make investments in many programs that will improve the lives of Minnesotans, including help for low-income families, improved access to health care for people with disabilities, and funding to build out the state’s mental health system.
The conference committee report provides $150 mill in additional funding for the Office of Higher Education, the State Grant program, and the MinnState and University of Minnesota systems. The Senate’s original proposal increased funding by $100 mill and the House by $306 mill.
The Senate Republicans’ judiciary and public safety budget proposal fell far short of keeping Minnesotans, corrections officers, or incarcerated people safe and adequately funding the state’s judicial branch.
The state government omnibus billspends a total of $1.15 billion in 2020-2021. The bill has a budget target of $66 mill over the base, it avoids the multitude of budget cuts proposed by the Senate Republicans, and it provides modest operating increases to many state agencies.
The final tax bill contained several bipartisan tax-relief measures, federal tax conformity, and several local tax provisions to help communities across the state. The biggest complaints were lack of conformity to at least $400 mill of corporate foreign income provisions, the use of $491 mill in budget reserves during a time of surplus, and unsustainable tax cuts that will put strain on the budget in future years.
The omnibus transportation bill provides $97 million in additional general fund resources for transportation as part of the global budget deal between Governor Walz and legislative leaders. Within the $97 mill general fund target, it provides $52 mill for the MNLARS replacement system, $23 mill for Metro Mobility, $13 mill for deputy registrars,, and $20 mill for the Disaster Assistance Contingency Account.
The Senate Republicans’ original veterans and military affairs budgetproposal had a $0 target and failed to adequately fund those who have served and continue to serve the state and country. The bill included no additional funding for operating budgets. The Department of Military Affairs (MDMA) received no additional funding – the only new money in the bill was a $50,000 transfer from the general fund to the Support Our Troops account for grants for individuals.